Ask yourself if you were surprised at the report that electric vehicle (EV) manufacturer Tesla Inc (TSLA), following a June 2010 IPO, is already as big in market cap as 108-year old General Motors (GM), at roughly $51 billion each. After all, Tesla is just 13 years old, and publicly traded for less than seven.
Many investors I know also cannot get their head around the sheer size of the Facebook, Alphabet and Amazon companies that are just 13, 18 and 22 years old. These young companies are already three of the five highest capitalized stocks in the US market despite only being publicly traded for 5, 13 and 20 years respectively. And they are not even in the Dow 30 index, which most people refer to as “the market”.
Of the other two biggest of the mega-caps, Apple joined the Dow 30 just two years ago, replacing AT&T (remember landlines and telegraphs!) and Microsoft has been there only since 1999, replacing Sears, a once great company that appears destined for bankruptcy. I remember Jim Cramer telling his CNBC audience how much he liked the Sears Kmart merger and why Sears real estate was so undervalued!
Speaking of the five biggest capitalized stocks on the NYSE or NASDAQ [Apple, Alphabet, Microsoft, Amazon and Facebook], which btw are all listed on NASDAQ, they have a combined market cap as big as eleven American giants: Exxon Mobil, Johnson&Johnson, JP Morgan, Wells Fargo, General Electric, AT&T, Bank of America, WalMart, Chevron, Procter&Gamble and McDonalds, combined.
That’s how quickly things change.
Younger people get it.
On the other hand, some of us even remember when Remington Typewriter and Studebaker Automobiles were operating companies, but not from the 1920s when they were components of the Dow 30. And I doubt there are any of us who remember other market leaders like American Cotton Oil Co, American Sugar Co, Distilling & Cattle Feeding Co, Natural Lead Co, Tennessee Coal, Iron & Railroad Co and U.S. Leather Co that were most of the original Dow 30 list or the gramophone maker Victor Talking Machines that was added later.
Things change. They always do, usually in waves, as happened in the late 1990’s with the Internet, which was driven by digital technology. There is always a driver!
“With the Internet, bands can come and go every five minutes and the music looks disposable.”
–Bruce Dickinson
Change happens so quickly I doubt you could name a company that is as dominant in its industry today as it was just 25 years ago! In fact, we know that whole industries have come and gone in this time.
I’m saying this because with the Trump focus on entrepreneurship, I believe the next wave of change is in the air. We traders need to stay alert and in the moment. So, anticipate change and be ready to fit it into your portfolio.
Enjoy your weekend.
/Bill
